Here is why e-commerce companies in India are kidding themselves

Only the foreign e-commerce players will operate in the horizontal domains in the future. It will finally boil down to Alibaba or Amazon!Ravi Balakrishnan | ET Bureau | Updated: September 07, 2016, 10:08 IST

One of the big lessons we’ve learned is we’ve lost control of the brand in the social media age. Consumers influence the brand and even marketers don’t control but merely influence the brand.

And yet the marketer’s job continues to be more relevant and increasingly complex, since he still has to decode what the consumer really feels. In your opinion who controls the brand?

The fundamental shift which we never realised till social media was that marketers always focused on the buyer rather than the user. In the social media environment, the user is more important than or equally important to the buyer.

Especially in industries like restaurants, airline and banking. The time gap between knowing what consumers want versus what they do and say has collapsed. All marketing laws were organised around location or time. Today, people are becoming time and location agnostic. They now work at home and shop at work.

Marketers have to take charge, but for a different reason. If they like your brand, consumers take liberties with it. They want to modify the logo or show their creativity. One of the smartest things I’ve seen is Frito Lay which said why don’t you consumers come up with a commercial for the Super Bowl? It led to the Crash The Super Bowl campaign.

In India, I see hundreds of talented people in shows like Sa Re Ga Ma or India’s Got Talent. Myntra used to be flooded with people who had their own ideas for T-shirt designs. Just like well earned print and broadcast, we have to learn social media as the next medium. It has more reach than any other. I can do voice, video and text all together.

Marshall McLuhan always said medium is the message. But today the messenger is the medium. On the internet, there are no limits to channels. Each celebrity or person with a following of four or five million is broadcasting.

Much is made of the innovation of the global startup universe: how it has provided solutions to a large range of consumer problem. Is this well-deserved or do startups get too much credit?

It’s the democratisation of entrepreneurship. There used to be entry barriers to a business: people had the desire but couldn’t do it due to capital infrastructure being much higher in the industrial age. Very few people could imagine making automobiles, for instance. But now, if there was one entrepreneur in the industrial age, there are at least a thousand in the digital age.

There’s access to infrastructure and operating systems. And just like businesses that turned unorganised sectors into organised ones profited, anything routine that you do, I turn into an app and then I make money. It’s that simple.

There’s even an app for bhajans!

And there are enough people who will subscribe! They have a subscriber base funded either by venture capitalists or advertising. But like any entrepreneurship, it’s always speculative. This is a digital bubble and it’s going to collapse. All the ecommerce companies in India are kidding themselves.

The rule of three will come in. They will become specialists catering to vertical domains like Myntra which does only fashion. Only the foreign ecommerce players will operate in the horizontal domains. It will finally boil down to Alibaba or Amazon! India is a battleground for many categories. For instance, consumer electronics which is a fight between the Koreans and the Chinese — the Japanese have surrendered.

This includes cellphones and PCs. (In the latter category), it’s a matter of time before the American brands either sell or collapse. To me, that’s exactly what will happen with e-commerce. It does not mean the retail front which is the site and the user interface. It’s all supply chain. Whoever has a global supply chain in place wins the game.

And the Indian players won’t be able to get this in time. You need sourcing in place from the key destinations, which turn out to be China and Europe. Putting contracts in place with those guys is a nightmare, especially out of India. If I am an Indian entrepreneur, those guys would say ‘why would I sign up with you?’ or they will extract a pound of flesh from you.

There is a raging debate around unit cost economics versus the whole global supply chain aspect. Do you believe more consolidation is on the cards?